A Wait in the Strait

Now, this optimism appears premature. Within less than 24 hours, the cease-fire was in doubt. By  April 9, the Strait of Hormuz was nearly empty, the ships still waiting inside the Persian Gulf. Once again, the shipping community is picking up the pieces from U.S. President Donald Trump’s ill-thought-through war against Iran.

Before 8 p.m. EDT on April 7, Iran and the United States agreed on a cease-fire. The erasure of civilization threatened by Trump earlier in the day was off. In exchange, Tehran agreed to let ships transit the Strait of Hormuz unimpeded.

As a reminder, before the war began on Feb. 28, the strait was completely open. In fact, traffic in the strait—which a traffic separation scheme divides into an Omani and an Iranian lane—worked so well that an average of 138 ships transited each day. Container ships and bulk carriers brought food and other necessities into the Gulf and moved commodities such as aluminum to the rest of the world. Tankers transported crucial Gulf oil and liquefied natural gas (LNG). For 38 days, all that came to near-complete standstill, with only a handful of ships linked to Iran or friendly nations allowed to transit.

Then, just before the deadline that Trump had given Iran, the two sides agreed on a cease-fire that would see the United States and Israel suspend its military attacks on Iran while Iran would also suspend its military strikes and, crucially, allow traffic through the Strait of Hormuz.

“A big day for World Peace! Iran wants it to happen, they’ve had enough! Likewise, so has everyone else! The United States of America will be helping with the traffic buildup in the Strait of Hormuz. There will be lots of positive action! Big money will be made. Iran can start the reconstruction process. We’ll be loading up with supplies of all kinds, and just ‘hangin’ around’ in order to make sure that everything goes well,” Trump posted on Truth Social.

The seafarers in the Persian Gulf were elated—and so were shipping lines and buyers of oil and LNG. On shipping trackers, one could suddenly see a few ships moving in the direction of the strait. But how was the exodus to be conducted? Which ships would get to go first? Ones linked to friendly nations, perhaps? Or the ones willing to pay the largest fees? Would all ships have to pay the toll that Iran had announced it would charge?

“Statements from the United States suggest a reversion to the peacetime transit status quo, while Tehran implies Iran will only permit vessels it approves under a system involving its armed forces,” Cormac McGarry, who leads the maritime intelligence and security services at the consultancy Control Risks, told me.

Then there was the matter of how to pay the tolls, considering that payments to the Iranian government are banned by most Western governments. McGarry predicted that “a small number of ship owners and operators will gamble and try to exit the Gulf in the coming days, but most will wait for further clarity from Iran on transit procedures.” The gamblers were the vessels that ship trackers showed heading for the strait. Notably, no ships were heading into the strait from the outside world.

Still, there was hope that governments would agree on a deal that would allow ships to transit the strait and clarify that whatever toll ships had to pay Iran would not be considered sanctions violations. Then Israel resumed bombardment of Lebanon—even though Prime Minister Shehbaz Sharif of Pakistan, the mediator, had announced that Lebanon was covered by the cease-fire.

That prompted Iranian Foreign Minister Abbas Araghchi to point out that “the Iran–U.S. Ceasefire terms are clear and explicit: the U.S. must choose—ceasefire or continued war via Israel. It cannot have both.” In other words, unless the United States told Israel to refrain from attacking Lebanon, Iran would consider the cease-fire over.

The Israeli attacks continued—whereupon Iranian state media announced that the strait was now closed again. Iran also told shipowners that any vessels attempting to transit the strait without Iranian permission will be “targeted and destroyed,” the BBC reported. In Washington, White House press secretary Karoline Leavitt insisted that Hormuz was open.

But it doesn’t matter whether Leavitt considers the strait open or not. The only thing that matters is whether shipowners consider passage safe enough, and they’re taking no chances. By April 9, the strait was extremely quiet once again, with only a few ships risking the journey. “Only the most risk-tolerant owners and operators will have taken the cease-fire announcements as a signal to sail, perhaps because they misunderstood them,” McGarry said. “The majority will need far more clarity and reassurances. Right now, that is not forthcoming at all, and it seems the most likely route out will be an Iran-dictated system that will probably put those who accept it at high risk of breaching sanctions—so unfortunately, the risk outlook still does not lend itself to any meaningful relief for shipping in the Gulf.”

Joshua Hutchinson, the managing director of intelligence and risk at the maritime risk company Ambrey, added: “Cheap cease-fires never hold. As with recent conflicts, we have to see stability over time for risk to be reduced.”

That’s not going to be soon—at least, not for most ships. Via contacts, I have received an internal Islamic Revolutionary Guard Corps (IRGC) memo. According to the memo, Iran’s National Security Commission has approved a crafty Hormuz-transit plan. Under the plan, ship operators would be required to supply information regarding their ships’ ownership, flag, cargo details, destination, and crew to the IRGC, the military force that effectively runs the country following the assassination of Ayatollah Ali Khamenei.

The IRGC Navy would then assess the details to ensure that ships are “not linked to Israel, the United States or other countries hostile to Iran, and if approved, discussions would begin on the amount of the fees.” Fees would be on a five-point scale, with ships from countries friendly to Iran receiving better treatment, and payments would be made in Chinese yuan or stablecoins pegged to the value of a real currency.

Hamid Hosseini, a spokesperson for Iran’s Oil, Gas and Petrochemical Products Exporters’ Union, has told the Financial Times that Iran would charge tankers in cryptocurrency at a rate equivalent to $1 per barrel.

There’s no way around shipping from the Persian Gulf, and shipping into it is crucial, too. Within the course of less than two months, the world has gone from Hormuz transit conducted without fear of attacks, and without toll payments, to transit that is either too risky or involves payment that enriches Iran and strengthens China’s currency.

The first victims remain the seafarers who are still stuck in the Gulf—but the ordeal will also continue to affect all shipping. That’s precisely why previous U.S. presidents avoided attacking Iran.